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9/30/21 Energy & Income Advisor Live Chat
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AvatarRoger Conrad
5:00
The status quo result in the Canadian elections means pretty investors can reasonably expect the same energy policy, which is supportive of the country's oil and gas companies. We will likely continue to see a parallel track of renewable energy development and industry decarbonization through development of technologies like carbon capture, but also regulatory support of pipelines and export infrastructure. For our favorites, I refer you to the feature article of the September 17 issue of Energy and Income Advisor. We currently rate Vermilion a buy at 10 or lower and expect to see a dividend in the next 12 months. The upcoming issue of EIA--which as I said earlier in the chat--will post in the next couple days and focuses on big picture energy issues we think will impact investor returns going forward.
AvatarRoger Conrad
5:02
Another from the email: at your recommendation I have WES, EOG, and PXD which are doing fine, but from day to day they "swing" greatly.. are they meme stocks ??? Frank J.
5:05
I think all three of these stocks are widely held and with oil prices pushing to where they are now, it's not surprising that the trading is heavy and jagged. WES being Western Midstream Partners is always going to be very dependent on what's going on at Occidental Petroleum, which still owns 49.09% of it and is the major customer. We think that will be a big positive going forward. EOG and Pioneer are banking quite a bit of free cash flow, but also are going to trade right along with energy prices. We think all three of these are going to head a lot higher, though only EOG and PXD are currently in our model portfolio.
5:06
Another email: KMI has been stuck in the upper teens, below 22, for a long time. this is unlike most of your excellent recommendations. Should we continue to hold it?--Frank D.
5:10
Frank, I have talked quite a bit about Kinder during this chat. The major point I'd make is the current share price weakness looks entirely related to technical factors--investor selling of fossil fuel stocks, dividend paying stocks and value stocks--as the fundamentals of the company look very sound. The acquisition of the Stagecoach system serving the Northeast looks better than ever with the Penn East pipeline now cancelled. And the company is rapidly expanding its renewable natural gas franchise acquired with Kinetrex, announcing three new facilities under construction this week. RNG is a natural winner not only from environmental preferences but also because spiking natural gas prices are boosting their economics. Bottom line, I still like it at a price of 22 or lower, though with the caveat that no one should ever really load up on a single stock.
5:11
“I own preferred shares in Altera Infrastructure (ALIN) that got clobbered when they recently suspended their dividend payment. What are the company’s long- term prospects? Should I hold onto the shares and wait for the cum divs to resume, or should I take my losses now before the company’s prospects become even worse?”
 
Thanks, David L.
5:15
David, Altera Infrastructure is not one we cover in Energy and Income Advisor. In fact, the only companies I'm seeing under that name are privately held. Perhaps you could write us back at service@capitalisttimes.com ? As a general rule, though, when a company cuts a preferred stock dividend--which I'm presuming this one is since you used the word "cumulative"--it makes since to take your lumps and move on. The exception would be when a company has a definite bottom in its fortunes on the horizon, for example as PG&E did when it declared bankruptcy a couple years ago to work out a deal with the state of California and wildfire victims.
5:17
My background is economics and we are are used to the supply and demand graph we’ve seen since Econ 101. But I’ve recently come across an interesting anomaly in the supply and demand of labor. This was an angle that I had never thought of. I’ve come across two friends in the medical industry who are making so much money now because they are getting paid twice as much as they were before hourly. So what’s happened is, many of their bills, such as mortgage, car payment, etc., haven’t changed in the past year or two. But their incomes have doubled. Normally that increase in income draws in more labor. But what these people have done is decided to work half as much because they just don’t need the extra money and would rather have the time off. So I found it interesting that increasing labor wages would actually discourage some workers from working more, and actually increase the labor shortage. Just thought you might find it interesting if you haven’t heard of it before.--Eric F.
5:19
Eric. thanks for that very interesting question. I think labor shortage/cost is a challenge for many businesses, including quite possibly energy. And certainly it's one we look at closely in all of our advisories, now that inflation pressures appear to be building.
5:20
OK
5:22
That looks like all the questions we have from the email this month. And as there are no more in the live queue, it looks like it's time to sign off. Expect to receive a link to all the Q&A tomorrow.
5:24
Also, as Elliott said earlier in the chat, we are now putting the finishing touches on the next issue of Energy and Income Advisor. And we will be sending you a  link to that advisory when it's available and up on the EIA website as well, which should be in the couple days.
Thanks again for participating today. We really appreciate your business and look forward to chatting with you again in the future!
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